A pair of U.S. senators who are pursuing a bipartisan proposal to reform Social Security aimed to calm fears late last week that their plan will lead to reduced benefits for recipients.
The senators — Republican Bill Cassidy of Louisiana and Independent Angus King of Maine, who caucuses with Democrats — are leading a group of legislators in a proposal to reform Social Security on several fronts.
As previously reported by GOBankingRates, their ideas include raising the full retirement age to 70 from 67. They also have proposed creating a sovereign-wealth fund to help pay for Social Security. The fund could be funded with $1.5 trillion or more in borrowed money.
Another option is changing the formula that calculates monthly Social Security benefits from one based on a worker’s average earnings over 35 years to a formula based on the number of years spent working and paying into Social Security.
These proposals come amid heightened talk of reforming Social Security before the program’s Old-Age and Survivors Insurance (OASI) Trust Fund runs out of money. That could happen as soon as 2032, according to one estimate, leaving the program solely reliant on payroll taxes for funding — which might cover only about 75% of benefits.
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Many Social Security advocates strongly oppose raising the full retirement age, equating such a move as a cut in benefits.
Cassidy and King looked to quell those fears in a joint statement issued on March 3. In response to what they called “incomplete and somewhat alarmist reports” regarding the proposal, the senators said their goal is to “preserve and protect the retirement security of all Americans now and long into the future.”
“The Social Security fund will be insolvent in less than a decade,” the statement said. “If Congress chooses to do nothing, current law requires painful 24% cuts to benefits and a daunting future for fulfilling our promises. If we come together now, we can preserve and protect the retirement security of all Americans now and long into the future.”
Cassidy and King said that “conversations are ongoing” regarding their plan, and they will provide further details when they have a “fully developed plan.” But they did offer a peek at a couple of possible elements.
“There are dozens of considerations being weighed to protect Social Security, including locking early retirement at 62, an ironclad protection for lower-wage workers, and seeking avenues to increase benefits immediately,” the joint statement said. “Under what we are discussing, millions would immediately receive more, and no one would receive less.”
The wild card is whether their plan even makes it to a Congressional vote. They might have a hard time convincing Democrats and even some Republicans to sign on to a higher full retirement age.
And as NBC News noted, President Joe Biden and many Democrats prefer addressing the funding shortfall through new revenues, while many Republicans favor reduced spending.
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